Coal burning accounts for more than half of all air pollutants in China known as PM2.5, which are more toxic than other pollutants because their small size allows them to travel deep into respiratory tissue. Exposure to PM2.5 pollution can cause coronary heart disease, stroke, lung cancer and chronic obstructive pulmonary disease. The study says people living in heavily polluted cities, like Beijing, have 10-15 percent greater risk of developing lung cancer.

In 2012 the number of new cases of coal miners suffering from pneumoconiosis — a lung disease caused by the inhalation of coal dust — reached 24,206, according to the study, accounting for 88 percent of all work-related diseases.

In order to account for these impacts, the report recommends that the price of coal be increased $42 per ton.

"This helps push the debate in China to realize the real consequences of their overconsumption on coal," Schmidt told VICE News.

NRDC aims to come up with a comprehensive roadmap and set of policies for establishing a binding cap on national coal consumption. It is pressuring the Chinese government to peak its use of coal by 2020 and then begin to significantly scale back its consumption.

"We've seen a much greater acceptance of the fact that China is going to have to shift off coal much quicker than people previously estimated," Schmidt told VICE News.

'Twenty-five percent of China's electricity production goes to making products for export.'

China's coal consumption dropped by 1-2 percent in the first three quarters of 2014, the first time it has done so in the 21st century, Schmidt told VICE News.

"Our conclusion is policy can ensure that these dynamics are staying for the long term," Schmidt said.

The study also argues that China's large-scale coal mining depletes the nation's scarce water resources and causes severe water pollution. Mining waste includes heavy metals and radioactive materials, which destroys more than one billion cubic meters of groundwater resources each year.

"Driving China's overall water shortage is the coal sector," Jennifer Turner, Director of the China Environment Forum at the Woodrow Wilson Center, told VICE News. "Coal is very thirsty."

Most of China's coal is mined in North China, where water resources are particularly scarce, Turner told VICE News.

Air pollution controls around Beijing were strengthened in October in preparation for the Asia-Pacific Economic Cooperation (APEC) summit, which takes place this week. NRDC's Schmidt says there will be a large international conference on coal consumption a week after the APEC summit and that NRDC will release several other reports on China's coal use.

China's air and water woes, says Turner, are not entirely of its own making. She emphasized the role of consumption in the United States in driving China's use of coal.

"Twenty-five percent of China's electricity production goes to making products for export," Turner told VICE News. "We're part of this equation."